Recovery of Overpayments

Is your retirement plan asking for money they mistakenly paid you?

Retirement plans sometimes overpay retirees by mistake and then try to get the money back.

It is surprisingly common for retirement plans to accidentally overpay benefits to retirees. The Pension Rights Center regularly hears from retirees and widows or widowers whose retirement plans claim they were overpaid and are now trying to get the overpaid money back. In some cases, the retiree may have been aware that a mistake had been made and kept the money or provided incorrect information to the plan that caused the overpayment. But in most cases the retiree or widow(er) had no way of knowing about the overpayment. Often these errors go undiscovered for years, so by the time the plan notices the problem the overpayment has added up over a long period of time.

Retirement plans use a variety of tactics to try to reclaim overpaid benefits. If it is a pension plan, the plan can reduce or even totally cut a retiree’s future monthly benefit payments to offset what it has overpaid. In some cases, retirement plans threaten to sue retirees or turn them over to debt collectors if they don’t repay the money. In most cases, the retirees spent the money and are not in a position to repay the amounts that their retirement plans are demanding, which can sometimes be tens of thousands of dollars.

When a retirement plan tries to reclaim overpaid benefits from a retiree, this process is known as recoupment.

Learn more about this issue

Click on the headings below to see more information.

Retirement plans are not legally required to recoup overpaid benefits from retirees.
Retirement plans may not recoup against the widowed spouse of an overpaid retiree.
Recoupment can be disputed.

Recovery of Overpayments Highlights:

Fact Sheets and Issue Papers
07/31/23 |Pension Rights Center

What is Recoupment?

Legislation & Regulations

Securing a Strong Retirement Act of 2020

The Latest on Recovery of Overpayments:

Comments & Letters

PRC Recommendations to IRS on Agenda Items for the 2022-2023 IRS Priority Guidance Plan

The  Pension Rights Center submitted comments to  the  IRS requesting the  agency  to include in  its Priority Guidance Plan several items to  better  protect consumers,  including: (a)  directing  plans to provide  former employees  who leave before retirement  with  a single  complete  statement  of  their earned benefits ; (b) asking the agency to rethink its position on allowing plans […]

Comments & Letters

PRC letter to the Committee on Ways and Means in support of specific provisions of the Securing a Strong Retirement Act of 2022

PRC sent a letter to Chairman Neal and Ranking Member Brady of the House Ways and Means Committee in support of specific provisions of the Securing a Strong Retirement Act of 2022, including those related to recoupment and the Retirement Savings Lost and Found.

Comments & Letters

PRC and Covington & Burling LLP comments to IRS on Rev. Proc. 2021-30

PRC submitted comments with Covington & Burling LLP to the IRS on Rev. Proc. 2021-30, which updated selected correction procedures for benefit overpayments under the Employee Plans Compliance Resolution System (“EPCRS”).

Blogs & Newsletters

Congress considers provisions that would limit when retirement plans can recover overpayments

By Emily Gilbert In my last blog post, I talked about how often we hear from people who cannot locate their retirement plans, and how Congress is taking steps to address this issue. Provisions related to lost retirement plans are included in legislation now pending in the Senate and House of Representatives. Two of these bills also […]

PRC In the News

Congressional proposal would limit when retirees must return pension overpayments

For some retirees, getting a large pension payment can become a big problem. Let’s say a pension plan mistakenly has been paying a participant too much and requires the person to pay back the money, typically through reduced future payments.

Blogs & Newsletters

Wall Street Journal article highlights “harsh” pension practice

By Karen Friedman This weekend’s edition of the Wall Street Journal features a front page article by Theo Francis highlighting pension plans’ practice of trying to recover money they have mistakenly paid their retirees, often years later when the retiree cannot afford to pay back the money. Although this practice, often called “recoupment,” has gone […]

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